Standing Committee B

[Sir Nicholas Winterton in the Chair]

Finance Bill

(Except clauses 1, 4, 5, 9, 14, 22, 42, 56, 57, 124, 130 to 135, 138, 139, 148 and 184 and schedules 5, 6, 19 and 25, and any new clauses and schedules tabled by Friday 9th May 2003 relating to excise duty on spirits or R&D tax credits for oil exploration.)

Nicholas Winterton: It is five minutes to the hour of nine on Thursday. I welcome all Committee members to this sitting. I am sure that the Committee will continue to make excellent progress. I keep very close tabs on what is going on even if I am not in the Chair, and I congratulate the Committee on the progress that it has made.Clause 136 Exemption where homeworker's additional expenses met by employer

Clause 136 - Exemption where homeworker's additional expenses met by employer

Stephen O'Brien: I beg to move amendment No. 251, in
clause 136, page 81, line 7, at end insert— 
 '(2A) A payment equivalent to a weekly amount not exceeding twice the amount of the national minimum wage in force from time to time shall be assumed to be reasonable for the purposes of subsection (1).'.
 I welcome you back to the Chair, Sir Nicholas, as we start our debate on employment income and taxation. We discussed clause 135 on the Floor of the House in relation to the various pressures and difficulties affecting such constituents as nannies, gardeners and butlers. With that background in mind, we arrive at this clause. 
 The clause permits employers to pay home workers. All Committee members will be deeply conscious of how much more significant the question of home working is these days. That is not just because of the demands of jobs and electronic opportunities to work at home; it would be helpful for Committee members to bear teachers in mind in relation to the clause. Under the clause, employers can pay home workers amounts free of tax to represent reasonable additional expenses that put them on a closer footing with site employees. I make no complaint about the need to put matters on a better footing. 
 The amendment is a probing one. It would be very helpful after I have outlined the reason for the amendment if the Paymaster General would outline whether the Government have target amounts in mind. The change is welcome, but Inland Revenue Budget note 3 states that no records will be necessary to substantiate a claim of up to £2 a week. We are concerned that £2 a week is a small figure, and is not necessarily commensurate with the £5 and £10 limits on personal incidental expenses that apply each night for night workers. We feel that £5 a week would be a 
 more realistic figure for the no-record keeping rule. That comes against a background of presuming that when the concession is formally published, it will refer to the need for the employee to keep records. It is difficult to see how an employer can provide the ''supporting evidence'' that the payment is wholly in respect of additional household expenses incurred by the employee carrying out his duties at home without record keeping by the employee, whom we note is not referred to in that context in Budget note 3. 
 Given the modern approach—the Paymaster General may want to confirm this in her reply—there is probably a case for a general review on the law relating to home working. It may be helpful if I highlight a case, which was helpfully brought to my attention by my hon. Friend the Member for Salisbury (Mr. Key), concerning tax relief for teachers. My hon. Friend's constituent, Mr. Chris Chelu, is a teacher who has engaged in extensive correspondence with the Paymaster General. He says: 
''I feel that it would certainly help make teachers feel more valued if they were to have this tax relief.''
 Mr. Chelu also makes this interesting point on home working: 
''As regards the Unions and their attitude to the 1265 hours of directed time, if we assume that teachers work in school for 40 weeks of the year, this only works out to 31.6 hours a week of directed time. I can't imagine that the unions accept that teachers should only work these hours. The job would not get done properly if this was the case. We all know that teachers work much longer hours than that, as has been shown by many surveys, and we also know that the hours that they work cannot be all fitted in at school and that the vast majority of teachers work at home. This tax relief is not a vast amount of money, and giving parity with university lecturers would oil the wheels a little and encourage teachers to accept the constant changes that seem to be part of education policy these days.''
 Mr. Chelu took his case to the ombudsman, who, understandably, disappointed him by saying that it was not within his remit to examine taxation. I raise the issue today because we are examining a combination of two issues, the sum and the absence of record keeping, which we must try to put on a realistic basis. The amendment is designed to probe the Government on the amounts that they have in mind. Mr. Chelu states: 
''it is clear that I am not the only teacher to feel aggrieved by the attitude of the Government and tax authorities in this matter.
I feel that it is most unfair that one group of educational professionals, university lecturers, should be treated to a tax relief, whilst another group, school teachers are denied the same, when both have contracts which do not formally oblige them to work at home.''
 The issue was first raised in an article in The Times Educational Supplement. Mr. Chelu continues: 
''Dawn Primarolo says that there is no obligation on teachers to work at home . . . If all teachers took Dawn Primarolo at her word she would be responsible for the complete meltdown of the school education system.''
 I do not endorse that argument and am not challenging the Paymaster General's position on the technical issue. However, I have drawn attention to that important area because we need to consider it. 
 I hope that the Paymaster General can elucidate the Government's thinking on setting a realistic amount that fairly reduces the bureaucratic burden of record keeping on the employer. The amount should relate to 
 people, such as teachers, who must work at home. The amendment suggests that the amount should be defined as a sum not exceeding twice the national minimum wage, which would be reasonable.

Michael Jack: I welcome you, Sir Nicholas, back to the Chair.
 I rise to support my hon. Friend the Member for Eddisbury (Mr. O'Brien) with my first question to the Paymaster General. What research did the Inland Revenue carry out to decide that £2 was the right figure? What enormous investigative analysis lies behind it? The amendment is correct to ask for a more realistic sum. If the home worker were to work five days a week, the per diem rate would be 40p. If they worked seven days, as many do, it would be even lower, at about 30p. In this day and age, when a home worker is required to use broadband technology to connect to their place of business, more than 30p a day worth of expenses may be incurred for that alone. 
 The clause states that 
'' 'household expenses' means expenses connected with the day to day running of the employee's home.''
 My conjecture is that one would knock up more than 30p to 40p a day just in having a brew a couple of times a day, making the odd phone call and keeping the light on. The Paymaster General will, no doubt, chastise us for having the nerve to question the £2 figure. She will say that the employer is not restricted from paying above that amount, but then at yet another cliff edge in the Bill we fall into the record-keeping arrangements that the clause ignores. 
 To be realistic about the matter, perhaps the Treasury should take a leaf out of the officeholder book, in which if one passes the wholly, necessarily and exclusively incurred rule, their expenses as predefined by their arrangement with their employer—the arrangement between the officeholder and the employer—can be automatically offset against income tax without the requirement for unnecessary record keeping. 
 The proposal is welcome but, to use a northern expression, a tad on the mean side. I look forward to hearing the justification for the £2 figure and, perhaps, the Paymaster General's agreement with my hon. Friend's proposal that a higher figure should be allowed in the clause.

John Baron: I, too, Sir Nicholas, welcome you to the Chair this morning.
 The majority of points have been covered. I rise in support of my right hon. and hon. Friends and would like to raise some further points. I, too, fully support this initial step to give a statutory exemption from income tax for the reimbursement of additional expenses that are incurred from home working. It is very welcome and I congratulate the Government on introducing it. It is worth remembering that some 1 million employees work from home in one form or another. The measure will be very welcome news indeed. 
 Home working is an important aspect of the modernisation of working practices in the UK. There is every indication that, if industry in this country is to remain competitive, home working will become an increasingly important characteristic of the way in which businesses lower costs and create a more flexible working environment. That is also welcome. 
 I wish to raise two very quick points. Could the Paymaster General give us some indication of how home working might be encouraged, and of the costs and benefits involved? What consultation is being undertaken on the matter? The impact of the uniform business rate and the difficulties in respect of travel expenses require full consideration in any such consultation. 
 My second point is about the sum of £2 a week. If we are to encourage home working, greater flexibility, and the modernisation of our working practices, welcome though the initial step of £2 is, it seems a little mean, bearing in mind the general running costs of a home. I ask the Government to consider the matter again and see what can be done.

Dawn Primarolo: Good morning, Sir Nicholas. I am glad that the hon. Member for Eddisbury wisely described his amendment as one that was intended to probe the Government's intentions. I concur with the point made by the right hon. Member for Fylde (Mr. Jack). Let us be a little realistic in approaching the discussion.
 The clause provides for a new income tax exemption for payments by employers towards reasonable, additional household expenses incurred by employees who work some, or all, of the time at home. Home working is not a new phenomenon. It existed under the previous Conservative Government. In fact, teachers' contracts were the same under the previous Conservative Government. Under existing law, most employees would be liable to income tax on such payments. The clause removes the tax disincentive for employers contributing towards additional household costs incurred by employees who work at home. 
 The amendment tabled by the hon. Member for Eddisbury does not give a figure, but pegs the amount to the national minimum wage. Although I am delighted by the belated conversion of the official Opposition to the national minimum wage, I should point out that there are different levels. Leaving employers to ascertain which level should apply would not, to put it mildly, be a sensible way forward in terms of trying to reduce the administrative burdens on them. It would have quite the reverse effect: it would increase those burdens. 
 Let me deal with the point raised by the right hon. Member for Fylde with regard to how we proceeded. The Inland Revenue had informal discussions with a number of employers that operate flexible working schemes. We went to those employers. The figure of £2 a week—£104 a year—was considered reasonable to cover the additional day-to-day household costs likely to be incurred by employees through working at home. Clearly, that figure will be kept under review. The 
 companies to which we spoke, which included British Telecom, consulted with the IT industry. 
 We went specifically to employers that currently pay expenses—because that matter is already provided for in the law. We will come on to teachers. We asked the companies what they considered to be reasonable in relation to the profile of what they were paying. I am sure that the right hon. Gentleman would agree that, as he often impresses on the Government, in such areas we should consider whether there is a real need and what the level is. The employers said that the move would help them. Up to that figure, no receipts are necessary and no agreement with the tax inspectors. No questions are asked: it can be paid. 
 The £2 per week is not the upper limit. Employers can meet the full amount of additional household expenses incurred by employees who work at home. They can already do that. The figure of £2 per week is intended as a de minimis to simplify matters for the employer. It is the de minimis that employers said would help them. They can pay up to that amount without needing to gather information about their employees' additional household costs. That does not preclude them from reimbursing above that level, but they would then be expected to ask for supported evidence of additional expenses. We can all use common sense over how large such costs are and whether the details are reasonable. 
 The hon. Member for Eddisbury asked whether employers will need to keep detailed records of additional household expenses if they reimburse by more than £2 a week. The answer is no. Employers can now agree with their inspector an average allowance based on reasonable estimates of their employees' additional household costs. The clause is incredibly modest, responding to representations from employers who currently make additional payments to their employees, and therefore know how the system operates. 
 The hon. Member for Eddisbury asked about teachers. They are in the same position as other employees. If their employer reimburses additional household expenses, they are covered by this exemption. The same rules apply to them as to everyone else. 
 The hon. Member for Billericay (Mr. Baron) asked a much wider question about home working. That ties in to the flexible work argument, and questions about what is and is not reasonable in the work-life balance. The current rules provide, without this exemption, for considerable flexibility of approach and discussions between employers and their inspectors. The hon. Gentleman asked what the future might look like. As a Treasury Minister assessing how that field of work will develop, I have an open mind over the best interests of the taxpayer and over whether the current tax rules will offer a way forward in supporting that alternative means of working without cutting across basic rules and assumptions in the tax system. 
 I cannot therefore describe to the hon. Gentleman our view on what the future will look like, but as more employees, with the consent of their employers, 
 consider more closely a combination of working from home and in the workplace, we are very sensitive to the need to consider the interaction of all the tax rules. That is what we are doing. As he rightly pointed out, there is an issue of travel expenses, and whether one is entitled to claim for travel to one's place of work. That can get rather complicated. This clause does not address such matters.

John Baron: I welcome the Paymaster General's words. Although there have always been, to my knowledge, regulations that allow flexibility over home working, we are taking quite a big step forward in encouraging home working through the tax system with this apparently small step. Although that will create complexity, having taken that step, the Government need to think through in consultation with business, all the ramifications, such as the implications of the uniform business rate as well as travel expenses. I welcome the Paymaster General's words, but there is a long way to go.

Dawn Primarolo: Any Government would need to be cautious in that debate because of the complexities of the tax system, as the hon. Gentleman has pointed out. That is why the Government are responding to requests from business for simplification. Businesses are just as cautious in recognising the issues for them, let alone the issues for the taxpayer and the Inland Revenue as the guardian of the taxpayer's purse.
 This is not the first step we have made in that area. The hon. Gentleman will remember that there is an exemption for the use of computer equipment provided for employees to work at home. There is an exemption for the use of other employer equipment or services supplied for employees to work at home. We recognise that the nature of work is changing, and we intend to proceed in consultation with all those who represent employees and employers to ensure that we get that balance right. 
 The clause has been useful in exploring the wider issues. I hope that hon. Members will appreciate that because of the complexity of the area, and in response to direct requests from employers, the exemption with regard to record keeping—not the maximum—has been set a level that we think is practical, but it will have to be kept under review. I know that that is something that we say about the tax system as a whole, but it will have to be kept under review to ensure that the operation does not produce distortions in the tax system or encouragements to structure in a particular way when that may not be in the best interests of the employer or the employee in the long run. 
 With those comments, I hope that the hon. Member for Eddisbury will feel that I have answered his points, and not press his amendment. If he does, I shall ask my hon. Friends to oppose it.

Stephen O'Brien: I am grateful to the Paymaster General for a reply that sought to address our points. I am glad that she felt the debate was a useful exploration of the broader issues in what is an increasingly recognised and important constituent of the way people work and organise their lives. I certainly accept that it has been going on for many years.
 I accept that the clause will be kept under review—I take the Paymaster General at her word. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Clause 136 ordered to stand part of the Bill.

Clause 137 - Taxable benefits: lower threshold for cars with a CO2 emissions figure

Question proposed, That the clause stand part of the Bill.

Michael Jack: I rise to speak on some of the principles that underlie the clause. As part of Government policy, it seeks to encourage companies, in particular, to purchase cars that are deemed to be more environmentally friendly by virtue of lower CO2 emissions. Will the Paymaster General say a few words about whether the Treasury has monitored the real-world effect of clause 137, and those parts of the law on motor taxation that it seeks to amend? A number of forces are moving inextricably towards the provision of more environmentally friendly motor cars. Manufacturers are using lighter materials to make cars with enhanced performance and lower fuel usage. We have discussed the development of environmentally friendly fuels and, as the explanatory notes rightly state, European Union targets are persuading motor manufacturers, without fiscal incentives, to produce cars with lower carbon dioxide output.
 The Government's structure of motor vehicle taxation, including the clause, is complex and designed to play a part in contributing to the uptake of cars with lower CO2 emissions. However, given the variables in the equation, which I described, we do not know the effect of the Government's fiscal intervention in achieving those environmental objectives through the taxation structure on cars. It is aimed particularly at companies, which are large purchasers of motor vehicles and have a significant ability to increase at a stroke the number of vehicles with lower carbon dioxide outputs. Measuring the effectiveness of fiscal policy is important if the Government want to achieve their objectives. The only problem is that we mere mortals who observe such matters do not, as yet, have a detailed analysis of what is causing the reduction in emissions that the Government seek. I would like an undertaking from the Paymaster General that the Government will, in due course, produce an analysis to enable us to see the wood through the trees. I suspect that there will be no difficulty in finding people with the right econometric skills to do that work because they have now finished the analysis on the euro and will probably be looking for something else to analyse.

John Healey: The Government are committed to using the company car tax system as part of their efforts to protect the environment and particularly to reduce carbon dioxide emissions, which contribute to greenhouse gases and global warming. The clause furthers the environmental incentives for that. It
 reduces the level of carbon dioxide emissions qualifying for the minimum company car tax charge by 5 g per km to 140 g per km in 2005–06. That will provide a continuing incentive for company car drivers and their employers to choose more fuel-efficient cars and encourage manufacturers to produce cars with lower carbon dioxide emissions. The right hon. Member for Fylde is right to say that many changes can contribute to that policy and that average carbon dioxide emissions are falling because of improvements in manufacturing and engine technology. The importance of the clause is to provide a continuing incentive for manufacturers to continue to produce, and for employers and drivers to continue to choose, more fuel-efficient cars.
 The right hon. Gentleman asked about monitoring. We are evaluating the effect of radical changes in the company car tax system. We are measuring its long-term effects and will produce an analysis in due course, but it is too early to say definitively what is happening, although the early findings from the ongoing evaluation suggests that the reforms are having the positive effect on the environment that we seek. Many company car drivers—97 per cent.—are already aware of the reforms; 85 per cent. of employers providing company cars support the environmental principles behind the reforms and more than half of employers providing company cars are already actively encouraging staff to switch to cars with lower carbon dioxide emissions. More than half have changed their policies on carbon dioxide emissions with the cars that they provide as a result of the changes. Overall, we expect the reform to the company car tax system, put in place last April, to lead to a projected reduction in carbon dioxide emissions that will save between 500,000 and 1 million tonnes of carbon by 2010. 
 Having set the level for company car tax reform when we introduced the changes, we are now setting the level for 2005–06 to give drivers certainty about how much their company cars will cost them during the next three years. For employees and employers renewing their company cars in the future, that furthers the incentive to choose more fuel-efficient cars, which are cleaner and more environmentally friendly. The right hon. Gentleman is right to say that company car purchases play a significant part in the market. Some 50 per cent. of new cars sold in the UK each year are sold to companies. Reducing carbon dioxide emissions from company cars is essential to help to protect the environment and to contribute to the Kyoto protocol and UK domestic cuts in carbon dioxide emissions. The clause continues our drive to reduce carbon dioxide emissions in this country, and on that basis I commend it to the Committee. 
 Question put and agreed to. 
 Clause 137 ordered to stand part of the Bill.

Clause 140 - Corporation tax relief for employee share acquisitions

Question proposed, That the clause stand part of the Bill.

Stephen O'Brien: The clause relates to schedule 23, which we shall come to later. For the benefit of the Committee, by way of introduction to what will be an extensive and important aspect of this morning's proceedings, in the context of various amendments that have been tabled to schedule 23, I shall say briefly that the clause and schedule provide a statutory corporation tax deduction for employee share acquisitions, and apply to acquisitions of qualifying shares by employees in the employing companies' accounting periods beginning on or after 1 January.

Nicholas Winterton: Order. I understand the hon. Gentleman's point about seeking to introduce a general debate in this area, but having looked at the clause it appears to me that very little can be said that should not be said under schedule 23. In a way, it would have been better to take this under the schedule.

Stephen O'Brien: I am grateful, Sir Nicholas. Although making those introductory remarks, I have also a specific point that arises as much under the clause as under the schedule. I had not quite got to that point.

Nicholas Winterton: Order. Let me make it quite clear that if there is to be any form of debate on this clause, I shall certainly not be disposed to allow a stand part debate on schedule 23. There are many amendments to that schedule. I leave it to the hon. Gentleman to make a decision. If he wants to introduce the subject under this clause, I am happy that he should, but I have indicated the way in which I am likely to respond later on.

Stephen O'Brien: I am grateful, Sir Nicholas. I am going to make the important point on clause 140. If as a result of your ruling you do not wish to have a stand part debate on schedule 23, I shall make this a longer debate, rather than making one very short point now followed by all the amendments to schedule 23 and then a stand part on schedule 23. I have some further points that relate only to schedule 23, which would be brought up under stand part because no amendments relate to them. I wish only to make a brief point on clause 140 as it stands, then—

Nicholas Winterton: Order. I think that the hon. Gentleman is seeking to be helpful and I am sure that I have taken his remarks in a helpful sense. If he is very brief, I understand his position and am happy for him to make a few remarks on the clause.

Stephen O'Brien: I am most grateful, Sir Nicholas. On that basis, I have a couple of sentences to go.
 Although we welcome the broad intention behind the legislation, we are, of course, keen to consider it properly, particularly in the light of the changes to employee share schemes, which we have debated. My point, which is intended genuinely to help the Committee and to compliment the Government, is to acknowledge that a final regulatory impact assessment has been made in relation to the clause and its accompanying schedule. It is important to acknowledge that the regulatory impact assessment relates specifically to the clause as well as to the schedule—the assessment is helpfully set out on the internet at www.inlandrevenue.gov.uk. It is estimated 
 that the cost to the Exchequer of the first full-year effect of the new relief provisions will be £45 million, rising to £95 million in the tax year 2007–08. 
 I am happy to follow your guidance, Sir Nicholas, on the other points relating to schedule 23 and will bide my time until we reach that point in proceedings. 
 Question put and agreed to. 
 Clause 140 ordered to stand part of the Bill.

Schedule 23 - Corporation tax relief for employee share acquisition

Stephen O'Brien: I beg to move amendment No. 213, in
schedule 23, page 323, line 34, after 'company', insert 'or another group company'.

Nicholas Winterton: With this it will be convenient to discuss the following:
 Amendment No. 214, in 
schedule 23, page 324, line 2, after 'company', insert 'or another group company'.
 Amendment No. 216, in 
schedule 23, page 324, line 22, after 'business', insert 
 ', or the part of the business'.
 Amendment No. 220, in 
schedule 23, page 324, line 23, after 'company', insert 
 'or by a group company'.
 Amendment No. 217, in 
schedule 23, page 324, line 25, after 'A', insert 'part of a'.
 Amendment No. 218, in 
schedule 23, page 324, line 25, leave out 
 'or to the extent that,'.
 Amendment No. 219, in 
schedule 23, page 324, line 27, leave out 'the business' and insert 'that part'.
 Amendment No. 221, in 
schedule 23, page 325, line 11, leave out 'parent' and insert 'group'.
 Amendment No. 222, in 
schedule 23, page 326, line 40, leave out 'parent' and insert 'group'.

Stephen O'Brien: The schedule is very long. On their first reading of it, I am sure that all members of the Committee found it extremely complex. Members of the Committee should bear in mind that amendments Nos. 213, 214, 220, 221 and 222 relate to a similar point and that the same arguments apply across them. Amendments Nos. 216, 217, 218 and 219 concern a separate point.
 The amendments are probing amendments, but they are not exclusively so and we may press certain of them to a vote depending on the response from the Paymaster General. The amendments are designed to probe the intention behind the legislation and to explore the extent to which it will operate. In particular, I am interested in how the legislation interacts with clause 139 and schedule 22, which were ably dealt with in Committee by my hon. Friend the Member for Arundel and South Downs (Mr. Flight). 
 The amendments address the following points, which I shall list to avoid our becoming bogged 
 down: the availability of a deduction to a group of companies; the clarification of a situation in which only part of a business is within the charged corporation tax; the nature of the shares acquired; takeovers; the interaction with anti-avoidance legislation; the interaction with accounting requirements, particularly international accounting standards; the cancellation of options; transfer pricing; definitional issues; and commencement clarification. That is the headline to the group of amendments. 
 I shall start by addressing amendments Nos. 213 and 214, which would extend the ambit of the relief to match the world as it is for group companies. I note that the Law Society is keen to make a submission on the matter. Like me, it considers that where an employee works for a company that is not their actual employer, relief should be available to that company if the other conditions of the schedule are satisfied. I am sure that I am not unique in Committee in having worked for a company that sits within a group of companies.

Dawn Primarolo: May I ask the hon. Gentleman to clarify that point? We are discussing share schemes given to employees by the companies for which they work in order to ensure that they share in the benefits. Why would we give relief to employees who have shares in companies with which they are not connected? If I have misunderstood his point, perhaps he will clarify it. The point of share schemes is that people receive shares in the company or group for which they work. How can it be an employee share scheme if the shares are in a company that is totally unconnected with the company or group for which someone works?

Stephen O'Brien: I am grateful to the Paymaster General for raising that point, which graphically illustrates my point. I shall delve into my personal experience: if one is employed by a plc listed on the FTSE 100, that plc is patently one's direct employer, in which case it would be perfectly normal to be issued with plc shares as part of one's share options. A large international group often has an operating subsidiary company within the control of the plc, which has a majority holding. Across continental Europe, however, family members often retain a minority shareholding. A valuation is therefore often placed on the progress of the operating subsidiary to calculate the value of the family minority shareholding properly without necessarily relating it to the plc.
 There is also the case of a joint venture—I know that the Paymaster General wants to intervene, but perhaps I can finish the example to see whether we can achieve a meeting of minds. Consider a subsidiary with operations in Northern Ireland, which would be inside the scope of both the United Kingdom and the legislation. Some 98 per cent. of it is owned by a plc and 2 per cent. of it is owned by a family member, who has retained their shares since the company was bought out. For the purposes of valuation, the plc will often have a direct interest in the executive management and should therefore be incentivised to 
 increase the value of the subsidiary company in Northern Ireland. If shares are issued for the Northern Ireland company or the plc company, there are two group companies in which the incentivisation to the employee, which is the legislation's purpose, matches their work.

Dawn Primarolo: I am grateful to the hon. Gentleman for giving way again because he wants me to answer his point. His point is that the family already holds the shares. He suggests that the share schemes should be extended. The basic rule of share schemes is that participants work for the company. I think that he is suggesting that as a reward the employer should be able to give employees shares in any company and expect to get the relief. That is not the basis of the share scheme legislation.

Stephen O'Brien: Perhaps I can try again. Let us imagine—this is based on my personal experience—that I am the executive director responsible for the management, growth, performance and accountability of a company called X Trading Company Northern Ireland Ltd., which is 97 per cent. owned by X plc. As the senior executive employee of the operating subsidiary in Northern Ireland, I would properly expect as part of the total group management to receive share options in the plc. Therefore, we are considering an attempt to ensure that the ambit of the relief extends to ensuring that a key employee in building X Trading Northern Ireland Ltd. as an operating, totally clear majority held subsidiary of X plc has the incentivisation as part of the total group effort to receive shares in X plc rather than the shares of their employing company, which is X Trading Northern Ireland Ltd., to which they are contracted. Is that helpful?
 I hope that the issue at stake is on the record very clearly. The contract of employment will be with the operating subsidiary—rightly so, because that is where the identity of interest is. There are also jurisdictional considerations, not least in Northern Ireland. Many UK laws apply equally in Northern Ireland as in England and Wales, but some specific laws and regulations are unique to Northern Ireland. Therefore, it is important if one were resident in Northern Ireland not necessarily to be considered to be an employee of the plc, which would have other consequences.

Dawn Primarolo: I am very grateful to the hon. Gentleman for giving way, because I am trying to get to grips with what he is saying. Let me summarise it. If I work for the subsidiary, I qualify for shares in the plc. I believe that that is correct.
 I was questioning the hon. Gentleman on the basis that one cannot have shares in a company that is not connected with the company for which one works, because that would break the scheme. I believe that he is talking about a group relationship, which I shall deal with in my reply. I am very grateful to him for ensuring that I understood that complex point.

Stephen O'Brien: I am equally grateful to the Paymaster General. I hope that she recognises that the amendments are designed to deal with the specific
 point on which we have now come to a common understanding.
 My other point is that that can work in reverse. I believe that the explanation has been helpful, because I had started by explaining that position but then moved to the opposite end. One can be an employee of the plc but have options in X Trading Northern Ireland Ltd. because it needs to have an identity of interest with co-management workers in the Northern Ireland subsidiary as that company grows, which could have an independent value if there were a very small residual family shareholding. For valuation, earn-out or fiscal purposes, it could be necessary to keep it at a separate valuation, although, of course, within broad plc accounting, normal consolidation under accounts principles would apply. However, in terms of valuation of the share options, there is nothing to stop the application of the valuation to a particular company's shares in the subsidiary operation. I hope that that more graphic example has been helpful. 
 Amendments Nos. 213 and 214 are basically designed to say that if the employee works for a company that is not his actual employer but, as the Paymaster General put it in her own words, is part of a continuing group relationship, relief should be available to the company if—this is an absolutely key requirement—the other conditions of the schedule are satisfied. 
 Amendment No. 220 follows the same argument. As I said earlier, the amendments are related. Amendment No. 220 would make relief available if the business were carried on by another company in the same group. The structure of the schedule is that relief is given to the employing company and that the business for the purposes for which the award is made must be carried on by the employing company. As in our previous discussion, that seems unnecessarily restrictive, particularly when matched against the genuine circumstances in the world of work, motivation and increasingly globalised business, in which there will necessarily be group operations, not least for fiscal purposes. 
 In many group situations, a dedicated group employer will employ all the staff and make their services available to other companies in the group. It is also common for staff to perform duties for more than one company in the group. It is frequently the case in a multinational group that a UK employee is actually employed by a company not within the charge to corporation tax but seconded to a UK trading company and receiving an award of shares or grant of option by reason of his work for that company. In such a situation, relief would appear to be restricted or lost. That relief should be available if the business for the purposes of which the award is made is carried on by another company in the same group. 
 I can best illustrate that with a simple example, and without straying too far into the overseas issue or the issue of companies that may not be chargeable in whole or part to corporation tax. As it happens, the matter arose in a rather amusing way during the course of the Eddisbury by-election in July 1999. Seeing that there was a by-election, Labour understandably put an enormous amount of effort 
 into researching the background of the Conservative candidate. Suddenly there was potentially a major story about why that candidate had 273 directorships listed at Companies House. It was seen as a massive opportunity to accuse the Conservative candidate of sleaze. 
 However, anybody who understands business recognises that in a plc it would be an absolute outrage to the shareholders, the customers, and all the stakeholders in the business, and the most inefficient use of management time and money, to have a company secretary for each of the 273 operating subsidiaries of that group company. In my case, the company was called Redland Secretaries Ltd. I was the chairman and director, and the assistant company secretary at group level, employed by Redland plc, was the other director. So, quite rightly, that person was secretary, under law, to all the operating subsidiaries. Naturally, I was therefore a director of 273 companies. When The Guardian was about to write the story, at the behest of Labour, I said, ''Please print.'' Unfortunately, because I was so keen for it to be printed, the story was withdrawn and the writer recognised that he had not understood business and nor had those who had been briefing him. That is the important issue.

George Osborne: Is my hon. Friend aware whether the Labour party employee who dressed as a fox and pursued him around the constituency of Eddisbury for a month was on a share incentive scheme of any kind?

Nicholas Winterton: Order. That is most interesting, but has nothing to do with the Bill.

Stephen O'Brien: I am most grateful for your guidance, Sir Nicholas. I am fond of the memories, not least because neither the corporate accusations, nor the fox were able to take away from the fact that 500 MPs, desperately working to ensure that I did not arrive, none the less had to suffer my maiden speech. Although the example is personal, it ably demonstrates what we are discussing. My employer could have said, ''In order to make your administration of our group much more efficient, I want to give you an incentive by giving you shares in a company further down the chain than the plc.'' That would have given me a great incentive if the company could have been measured and valued in that way. There were plenty of opportunities, but, as it happens, I was granted plc share options. Sadly, they were under water, and I never benefited.
 On amendment No. 221, the same issue comes up. The categories of companies whose shares can be acquired seem unduly restrictive, given the categories of companies set out in paragraph 4. It seems strange to extend the categories of companies whose shares can be acquired to consortiums, but to prevent shares from being acquired from the subsidiary of a listed parent, unless that subsidiary is the actual employer or a parent of the employer. The Law Society considers that any company in the same group as the employing company should qualify. 
 I have dealt with amendment No. 222. Amendments Nos. 213, 214, 220, and 221 all relate 
 to the same argument. I hope that it has been sufficiently demonstrated, and I look forward to the Paymaster General's response.

David Laws: The hon. Gentleman is developing quite an interesting and important argument in the light of the way in which modern business works. Can he perceive any asymmetry, in relation to how the Finance Bill might be amended, between allowing people to trade up through a group and to have shares in the group, and people trading down into quite small entities in the group that might be divorced from the interests of that part of the group in which the employee works.

Stephen O'Brien: Obviously, that intervention was based on the hon. Gentleman's understanding of the way in which business works. I suspect that there may be some asymmetry in that the more that shares are granted down the chain, the more the areas in which any value creation or performance can be measured are restricted. The important point about share options is to harness key employees' incentivisation to the growth of shareholder value and the satisfaction of customers who produce that in a broad economic and commercial sense. The hon. Gentleman's point would have a negative effect on the argument only if one was looking to provide incentivisation at a more micro level within the group operating structure and if a fiscal benefit could be achieved by a company lower down the chain than at the plc, thus making the overall measurement of post-tax shareholder value more interesting at a geared and leveraged point relative to the performance and input of that key employee.
 There may be that potential, but given that the overall group performance is where the shareholder value is measured, it is most likely to work in the other direction to maximise the contributory value of any subsidiary company operation into the overall consolidated accounts and thus the plc valuation. I hope that he recognises that my arguments on the nature of modern business, when there are often earn-outs with continuing residual family or former owner shareholdings and it could be important to create that value, or when there is a partial overseas operation and so often a tax grouping is available—for example, in Holland—which is not available here, it would be sensible to ensure that that was accessed if it could be done properly on a trade account basis to allow that measurement to be made. 
 I am grateful for the hon. Gentleman's question. I have put my answer on the record and if there are any wrinkles, they can be explored. I suspect that his anxiety is much assuaged by the motivation, which is to achieve maximum shareholder value, which is why share options are broadly seen to be an important part of today's remuneration package for key employees. 
 Amendments Nos. 216, 217, 218 and 219 would clarify the position when only part of a business is subject to corporation tax. The amendments speak for themselves, but we presume that when only part of the business carried on by the employing company is within that charge to corporation tax, the award or grant must be made for the purposes of that part of the 
 business carried on by the employing company, which is within the charge to corporation tax. If that is the intention, paragraph 3 should be clarified to make that clear, and that is supported by the Law Society. That is the purpose of the amendments. 
 KPMG is concerned about how the paragraph will operate in practice and equally concerned that many companies have mobile work forces with employees who may be seconded to work for overseas subsidiaries. It will not always be possible to assess whether the award is made for the purpose of the UK business or that of an overseas subsidiary. KPMG would appreciate clearer drafting or additional guidance to determine how companies will apply the rule as it envisages it causing considerable administrative inconvenience for companies with a mobile work force. 
 I hope that that approach is straightforward and deals with this group of amendments, albeit from two planks of argument. I look forward hearing the Paymaster General's response.

Dawn Primarolo: In responding to this large group of amendments, which were helpfully and clearly laid out by the hon. Member for Eddisbury, I shall first make a few points about the purpose of the schedule. I will then be able to put his questions and amendments into that context.
 Schedule 23 introduces a generous new corporation tax relief for the cost of employee share acquisitions and is deliberately targeted at shares that give employees a real stake in the business that they have worked for, encouraging productivity and growth. That does not extend to the use of shares in subsidiaries or unquoted companies or to non-commercial transactions that artificially manipulate the value of the shares. Those are characteristics of the avoidance scheme, which schedules 22 and 24 are aimed at. We have had that discussion already. Through that scheme, remuneration of £1.4 billion a year is channelled. I am sure that the hon. Gentleman would agree that it would be wrong to give statutory relief for avoidance schemes when the purpose of the schedules is to deal with them. 
 The draft legislation was published at the end of 2002, following informal consultation with the industry, and the new relief was widely welcomed as a set of clear, well-written rules that work effectively to deliver what companies want. As the Employee Share Ownership Centre puts it, it will deliver a major fillip to employee share ownership. 
 Schedule 23 matches relief for the employing company in tying in the amount with the taxation of the employee. That gives companies certainty against a background of uncertain accounting treatment. They told us during consultation that that was what they wanted above all else. It also provides a level playing field between the use of cash and shares as remuneration, and between large and small companies. It gives relief to the employing company in a group scenario, irrespective of the group company in which the employee works day to day, making for simplicity of operation. It will also enable companies 
 to do away with the complex and costly trust structures previously needed, benefiting smaller companies in particular. 
 It is expected that up to 5,000 companies will benefit and save a considerable amount of money. That has all been carefully drafted in consultation with the industry. It is important that we ensure that double relief cannot arise and that, wherever possible, it is not open to abuse. That incorporates a number of improvements suggested following publication of the pre-Budget report. 
 I begin by saying to the hon. Gentleman something that will be a theme as I proceed to respond during the debates. Taken in toto, the amendments that he tabled carry a cost of £2 billion. That should show him the scale of the avoidance or mischief that some, unfortunately, seek to achieve. I want to deal particularly with some of the hon. Gentleman's points.

Stephen O'Brien: During the introduction of the amendments, I had a very useful exchange with the Paymaster General to clarify the aims of the amendments. They purely concern group operations. In relation to the mischief, she suggests that the amendments would cost £2 billion. First, it would be helpful if she could confirm whether that assessment is based on her original understanding or has been made in the light of our exchange. Secondly, does the £2 billion have an analysis attached to it? If so, it would be extremely helpful to see that so that I can ensure that my understanding of the source of the mischief is right, given that I still think that the amendments are an attempt to address the way in which real business works in the real world. We should not penalise those for whom incentives and remuneration are important.

Dawn Primarolo: I want to stress, as I do not want any misunderstanding, that I am not suggesting for a minute that the hon. Gentleman is seeking to provide for mischief. I am referring to the total group of amendments—the whole debate on this schedule—because there are separate issues under these amendments, and I shall explain at each point where the possible double or triple relief would occur. I want to use that to underline the importance of striking the right balance between incentivising employees, providing relief for employers and delivering the policy objective for the company in which the employee works.
 As I have already explained, the objective of the schedule is to simplify the corporation tax treatment of employee share schemes. Amendments Nos. 213 and 214 seek to remove the link between the employee and the employing company. They would make relief available to a company if an employee of a group company acquired shares by reason of employment with any company in the group. However, the relief is targeted at the employing company as the company with responsibility to maintain records for PAYE. That therefore minimises any additional administration resulting from the introduction of the relief, and makes it clear which company qualifies for the relief. We are talking there about the company that qualifies for the relief. 
 It is true that some respondents have voiced concern that the relief—I think that this is the point that the hon. Gentleman touched on—may not be available where employees move around a group, between options being granted and exercised, to acquire the shares. I can confirm that where that happens, relief is still available to the employing company that granted the option because that is the company that provides the shares. Although the amendments would not change the availability of the relief, they would lead—inadvertently, I am sure—to additional administration costs because groups would need to decide which company should qualify for the relief and ensure that the others did not incorrectly claim the relief as well. 
 Amendments Nos. 216, 217, 218 and 219 seek to change the rules requiring that the business awarding the shares is chargeable for corporation tax. I think that that arises from uncertainty about the meaning of ''business'' in the context of schedule 23. If that is the case, I can assure the hon. Gentleman on how the new rules will work, and say that the Inland Revenue will provide clarity on the rule in its guidance material. ''Business'' in this context refers to the trading and/or other activity of the company that is subject to corporation tax, not to the commercial activities of the company more generally. Because of that, the concept of part of a business does not exist. A trade, property-letting business or other activity is either taxable in its entirety in the UK, or it is not. If it is a UK taxable business, relief is available. If it is not, relief is not available. This is a sensible proposition about the UK tax system and encouraging growth in productivity and business that benefits the UK in terms of tax, productivity growth, jobs and future developments. 
 The amendments add nothing to the meaning of the rules. Amendment No. 218 may lead to excessive relief in the case of UK branches of a foreign-controlled company carrying on part of that company's trade in the UK. Amendment No. 220 seeks to expand the rule that requires business for the purposes of which the shares are awarded to be within the charge to corporation tax so that businesses can be the employing company or any other group company. 
 I am still not clear about the amendment's purpose. It might result from the need to make changes consequential on two other amendments, but it is more likely to arise from a misunderstanding of the way in which the legislation operates. The hon. Gentleman and I had an exchange as he was introducing it, where he raised the issues of service companies. 
 Officials in the Inland Revenue have received—this may be where the amendment comes from—a number of representations that relief will not be available if all employees in a group are employed by what is termed a service company. In such circumstances, rules would allow that service company to obtain relief. That is because it is the employing company, and its business is that of providing a work force to the rest of the group, for which it makes management charges. The amendment adds nothing to the way the relief works. 
 Amendments Nos. 221 and 222 seek to change the type of company whose shares, when acquired by employees, give rise to relief from corporation tax for the employing company. The new relief is designed to provide a corporation tax deduction for the costs of awarding shares that give employees a stake in the business, which is crucial to all the arguments on the amendments. It achieves that by allowing shares in the employing company, its parent company or a company above that in a group or consortium structure to be used. While the amendments make what appears to be a minor change by replacing ''parent'' with ''group'', the effect would be to allow shares in subsidiaries of employing companies or fellow subsidiaries in the group to qualify for relief. 
 I try to make it clear that the relief goes to the company that the employee works for. It is about where the relief goes, not necessarily where the shares are.

Stephen O'Brien: The Paymaster General is relying on the idea that the relief is targeted and available to the company for which the employee works. Does that also mean, and is it intended to mean, that is the company with which the employee has their contract of employment? It is clearly possible to have a contract of employment with one company and also to work and devote one's services to another company within the operating group.

Dawn Primarolo: Yes, it is the contract. That is precisely the point on service companies. I already answered that point for the hon. Gentleman about his fears about service companies. With regard to the change of parent or group, we do not consider that shares in fellow subsidiaries in a group structure or in subsidiaries of the employing company provide employees with a real stake in the business for which they work. The relief will work as designed, and will protect the Exchequer from loss of tax. The debate has been about clarification of the operation of the schedule. I believe that the hon. Gentleman moved his amendment on that basis. Where clarification of the practical use of the new rules is needed, that will be included in the Revenue guidance that is being prepared. That will be published in time to be of assistance to companies that are compiling their first self-assessment tax return for the accounting period starting on or after 1 January 2003.
 We will pay particular attention to some of the points that the hon. Gentleman made this morning when we draft that guidance. I have given a long response to a large group of amendments, which go to the heart of the operation of the schedule. I hope that the hon. Gentleman feels satisfied. Should he seek to press the amendments, I will ask my hon. Friends to oppose them.

Stephen O'Brien: I am grateful to the Paymaster General for taking the care to offer clarification and address the issues that I have laid before the Committee. Amendment No. 220 should be
 withdrawn in the light of the categorical assurance from the Paymaster General that business—

Nicholas Winterton: Order. Amendment No. 220 has not been moved. Amendment No. 213 has been moved; we have simply discussed amendment No. 220.

Stephen O'Brien: I am grateful, Sir Nicholas, for your ensuring that I chart my amendments through arcane waters in which you have expertise beyond any that I am ever likely to have. Had amendment No. 220 been the lead amendment, it would have been fit to withdraw it in the light of the assurance given by the Paymaster General that the Inland Revenue intends to offer clarity on the definition of business.
 The issues are genuinely complex. The Paymaster General made the valid point that there has been a helpful exploration of the broad thrust of the schedule. I am happy to postpone further consideration to another time. In the light of what is now on the record, others will be able to read our exchanges, and there may be further representations to Government and to us. It is possible that we will return to some aspects of this matter on Report, either on issues of definition or clarification. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn.

Nicholas Winterton: I congratulate the hon. Member for Eddisbury and the Paymaster General on the quality of debate on a very complex matter.

Stephen O'Brien: I beg to move amendment No. 215, in
schedule 23, page 324, line 7, leave out 
 'the company mentioned in subparagraph (1)' 
 and insert 
 'the company by whom the employee is employed or if that company is not the company for which the employee actually works, the company for which he actually works.'.
 I am grateful, Sir Nicholas, for your kind words—and I am sure that the Paymaster General shares my gratitude. It is rather concerning when one finds that people have been paying attention; they may have been listening too carefully on a subject that is always difficult to understand. 
 Amendment No. 215 seeks to extend the ambit of the relief. The point was raised with the Opposition—possibly with all Members of the Committee—by the Law Society, which considers that when the employee works for a company that is not his employer, relief should be available to that company if the other conditions of the schedule are satisfied. That point relates to points raised in the previous debate. I look forward to a brief response from the Paymaster General.

Dawn Primarolo: The hon. Gentleman said that amendment No. 215 stems from a concern about how the relief will work when employees move around within a group. I hope that the amendment was moved merely to elicit clarification. We touched briefly on the subject in the previous debate.
 Schedule 23 is designed to provide relief to the employing company when employees acquire qualifying shares, irrespective of where within the group the employees are working at the relevant time. 
 Relief is provided to the employing company rather than to another company in the group, because the employing company is responsible for operating PAYE. To fulfil that responsibility, the employing company keeps employees' remuneration records, which will also be needed to determine the timing and amount of relief available under schedule 23. Providing the relief to the employing company will therefore help to keep the administrative burden to a minimum. 
 The amendment would lead to an increased administrative burden, and to uncertainty about how the rules should apply. For instance, when an employee, such as a senior manager, is mobile within a group and works regularly at a number of different companies, the current rules provide relief to the employing company. However, the changes proposed in the amendment would mean the relief being apportioned to each and every company at which the employee worked; that would significantly increase administration and record-keeping requirements. That answers the hon. Gentleman's query about why we are keeping the relief in one place. We have married that provision with the PAYE obligations in order to produce simplicity of record keeping for the employing company.

Stephen O'Brien: I am grateful to the Paymaster General. Her explanation has added to the clarification that she gave on the previous group of amendments.
 Only one point remains. The employing company receives the relief irrespective of where the employee is working within the group. My residual concern is that although I recognise both for companies and for the Revenue of the genuine administrative efficiency to be gained from ensuring that PAYE administration is kept at one company, the real issue is whether there is any potential distortion about which company should grant the options. My query is whether that is a PAYE administrative issue, or whether one should be trying to align the employees' incentives—as part of their remuneration package—to the true companies in a group that are the value creators for the shareholders, customers and all other stakeholders.

Dawn Primarolo: Relief is given to the employer company to recognise the benefits of share ownership and to keep administration to a minimum. The hon. Gentleman touched on losses. If losses arise, group relief allows the group as a whole to retain the relief. At each point of its operation, we are trying to keep record keeping for the group as simple as possible, given the obligations on companies to report the issue of shares to the Inland Revenue.

Stephen O'Brien: That was helpful. There is no question about the need to be administratively efficient in record keeping and in the normal consolidation procedure, both in accounting and, in relation to the reliefs, in the fiscal consolidation that enables tax buffers to be calculated, to try to get a steadier stream of earnings—which will then give greater confidence to shareholders, and greater value—given that there will be flexibility and, inevitably, volatility between markets where an international group of companies
 is involved. All that is perfectly understood, and the Paymaster General's explanation was helpful.
 All that I leave on the record is the need to ensure, as people reflect on our debate and consider whether there are other points that they wish us to address before or on Report, that there is no potential distortion caused by the administrative efficiency driver. That driver may not necessarily enable companies in the future to align incentivisation to the group company that is most likely to be creating shareholder value, which will be a greater company, with more sustainable job prospects.

Michael Jack: I wish that I did not have to intervene on my hon. Friend. In his remarks, he teased from the Paymaster General a very brief, passing observation about company losses in connection with the reliefs to which the amendment refers. I was going to explore whether in a loss situation there is any roll-over for the reliefs related to the granting of the shares. Has my hon. Friend explored that intriguing point?

Stephen O'Brien: I am grateful to my right hon. Friend for having placed the point on the record. In the normal operation of such matters, and where losses can be consolidated, there is a natural, in-built, roll-over provision in one sense because share option plans have a time period. However, that is primarily connected with reliefs, according to the fiscal accounting rules applicable to each company. I am sure that, by placing his point on the record, my right hon. Friend, too, has enlisted a future response. If it is worthy of a letter, I dare say that he will find one winging its way to him from either the Revenue or the Paymaster General. I am grateful to him.
 I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn.

Gerry Sutcliffe: I beg to move, That further consideration be now adjourned.

George Osborne: I do not want to try to Committee's patience, or upset any agreement reached by the usual channels. I do not want to get on the wrong side of my hon. Friend the Member for Spelthorne (Mr. Wilshire)—I can see him looking a little surprised and concerned that I have got to my feet. However, I have a couple of concerns over why the Committee is being asked to adjourn at this stage, a full hour before we expected to, at considerable inconvenience to the diaries of many Committee members. I assume that the explanation is that there are Treasury questions in the House.
 I see that one Treasury Minister is busy swotting up on his questions. Surely he should know the old adage given to schoolchildren: do not swot for exams at the last moment. I would have assumed that the Treasury Ministers had done their homework and spent many hours thinking of the careful and measured responses that they would give to Members' questions. It is really extraordinary that the Committee is being asked to adjourn to give Ministers a little extra preparation time. 
 There is of course another possible explanation.

David Laws: The reshuffle?

George Osborne: As the hon. Gentleman says, it is a nervous day for junior Ministers. We understand the pain that they are going through. Their minds may not be entirely focused on the job, because they may not have one this afternoon, or they may have another job. I know that the Ministers will be keen to head off and sit by their telephones waiting for that all-important call. That is not an entirely proper reason to adjourn the Committee, but it is an entirely human one. I am prepared to consider the request.

Stephen O'Brien: My hon. Friend the Member for Tatton (Mr. Osborne) has put his arguments on a certain basis. One of the very few things that we in the Opposition have, although it is frustratingly not sufficiently cogent in terms of the political firmament, is that Ministers cannot be sure which questions we shall ask. I hope that the swotting up is extensive.
 The most important thing that we need to address is that the proceedings this morning will be foreshortened by 55 minutes. I am conscious of the fact that it is in the interest of the Committee and the House to seek to ensure that we cover the provisional selection of amendments by the conclusion of the Committee's proceedings intended at 5 pm on Tuesday 17 June. Taking any time to debate this sitting takes more time from our proceedings. 
 I cannot see how we are going to cover this schedule, which the Paymaster General accepts is not uncomplex. It requires a proper exploration. We understand what the Government are driving at, but it is proper that we should give it full scrutiny. I place on the record that we may need an extra sitting to get through the schedule. I hope that that will be part of the discussion that is going on.

Gerry Sutcliffe: I may be able to shorten the debate somewhat. This is not an unusual step; those who have been on the Finance Bill Committee before have seen such clashes occur, and they have been accommodated on previous occasions. To answer the hon. Gentleman's point, we are looking at extra time to replace the hour lost this morning.

Stephen O'Brien: I am most grateful, and welcome that. Once we get through schedule 23, I expect that we should be able to make rapid progress. It is important that we cover the whole Bill if we can.

Michael Jack: I admit to being taken aback at the fact that we have been invited to end. Just as we were limbering up to our task this morning, we are stopped
 in our tracks. There is an important point of principle at stake. The adjournment appears to be connected to Treasury questions, but that date was known when the original timetable for the Committee's proceedings was decided. If we are to adjourn in future, and there may be good reasons why an adjournment has to be sought, such things should be taken into account in the timetable. As a Committee picks up its own pace and rhythm and hon. Members can follow arguments, as my hon. Friend the Member for Eddisbury said, on complex, inter-connected amendments, one needs continuity of discussion and cerebral engagement. However, here we are being cut off—perhaps not at the head but at least at the knees. I can understand that, but I hope that the usual channels will reflect on it. The hon. Member for Bradford, South (Mr. Sutcliffe) said that there have been clashes. This is not a clash; it is a civilised discussion of an important motion.

David Wilshire: I shall resist the temptation to speak until 25 minutes past 11. In my more mischievous, youthful days, I might have succumbed to that temptation. All I want to say is that I am grateful to my opposite number, the hon. Member for Bradford, South, for giving me notice of the motion. Our willingness not to fight this as a matter of principle is based on the offer of an extra hour in replacement. On that basis and that basis alone, Conservative Members are willing to accept the motion. It leaves open the other issue of whether, in principle, there is enough time for the whole Bill, but that is not the subject of this argument.

Nicholas Winterton: Unfortunately the decision about the length of the Committee stage has been made by the House, but at all times I seek to represent the best interests of Back Benchers and all members of the Committee. Clearly, I am reassured by the Government Whip's assurance.
 However, I give notice that, inevitably, as we are varying the decision taken by the Committee in respect of the motion to adjourn and the Government Whip has given us the assurance that we will have an extra hour, there will have to be a meeting of the Programming Sub-Committee. It is hoped that that will take place five minutes before our 2.30 pm sitting. I hope that those who are members of the Sub-Committee will take note of that and be here. 
 Question put and agreed to. 
 Adjourned accordingly at twenty-five minutes to Eleven o'clock till this day at half-past Two o'clock.